Downes: FCC at a Crossroads

As the once-separate wired and wireless communications networks for voice, video and data converge on the single Internet Protocol standard, the Federal Communications Commission stands at a crossroads. It can serve as midwife in the transition to next-generation networks. Or the agency can put on the blinkers and mechanically apply regulations designed for a bygone era.

FCC Chairman Julius Genachowski, for one, believes the agency is clearly on the side of the future. In an op-ed last week in The Wall Street Journal, the chairman took justifiable pride in the focus his agency has demonstrated in advancing America’s broadband advantage, particularly for mobile users.

Mobile broadband has clearly been a bright spot in an otherwise bleak economy. Network providers and their investors have spent more than a trillion dollars since 1996 building next-generation mobile networks, essential for today’s high-bandwidth ecosystem of innovative products and services.

Mobile broadband is entirely dependent on the continued availability of new radio spectrum. In the first five years following the 2007 introduction of the iPhone, mobile data traffic increased by 20,000 percent. No surprise the 2010 National Broadband Plan conservatively estimated that mobile consumers desperately needed an additional 300 megahertz of spectrum by 2015 and 500 MHz by 2020.

With almost all usable spectrum long allocated, the plan acknowledged the need for creative new strategies. But so far, despite initiatives to employ TV “white spaces” and the passage early in 2012 of incentive auction legislation, almost no new spectrum has been freed up. The last significant auction was in 2008, based on capacity made available in the digital television transition.

The “shared” spectrum the agency has recently been touting would have to be shared with the Department of Defense and other agencies, which have stonewalled a 2010 executive order to vacate unused or underutilized allocations. (The federal government is, by far, the largest holder of usable spectrum today, possessing as much as 60 percent of the total.)

And after more than a year of ongoing design, there is still no timetable for incentive auctions to reassign spectrum being wasted by over-the-air TV broadcasters, who may in any case refuse to cooperate.

Even in the best-case scenario, it will be years before significant new spectrum becomes available for mobile devices. In the interim, the mobile revolution has been kept alive by creative use of secondary markets and by mergers and acquisitions. But not all transactions have been approved. And efforts to reallocate or reassign underutilized satellite spectrum are languishing. Delays are endemic.

So even as the FCC pursues its long-term plans for spectrum reform, the agency must redouble efforts to encourage optimal use of existing resources. The agency must accelerate its review of secondary market transactions, and place the immediate needs of mobile users ahead of hypothetical competitive harms that have yet to emerge.

In conducting the incentive auctions, unrelated conditions and pet projects need to be kept out of the mix, and qualified bidders must not be artificially limited to advance vague policy objectives that have previously spoiled some auctions and unnecessarily depressed prices on others.

Let’s hope Congress holds Genachowski to his promise to “[keep] discussions focused on solving problems, and on facts and data ... so that innovation, private investment and jobs follow.” We badly need all three.

Larry Downes co-authored “Big Bang Disruption” with Paul F. Nunes in the current issue of the Harvard Business Review. Downes’ most recent book is “The Laws of Disruption,” published by Basic Books.